Book Review: The Millionaire Next Door

The Millionaire Next Door isn’t your typical “how-to-get-rich” book. It’s a personal finance book that will change the way you think of millionaires, and just like any other great finance books, it does not lack valuable financial lessons that you can practice doing in your own life.

I could also say that The Millionaire Next Door is the most non-fiction book that I’ve ever read.
It’s because most of the content of the book is backed up by the statistics that the authors, themselves, had gathered when they started their study that involved individuals with at least a net worth of a million dollars.

Now, those statistics are so surprising, you may not believe that they are true when you first read them. Even the authors of The Millionaire Next Door were surprised to find out that these millionaires don’t really live where they thought they’ll be living, and that these high net worth individuals are just ordinary people who can live at any kind of neighbourhood in America.

You may not know it yet, but maybe your neighbour could be a millionaire himself. I think that’s how the authors came up with the title of the book, “The Millionaire Next Door”.

Of course, that’s just my intelligent guess.

The Millionaire Next Door Book Review

So, what is The Millionaire Next Door all about?the millionaire next door book

Interesting facts inside the book:
  • 80% of millionaires in America are first-generation rich
  • 97% have their own home
  • 50% of them are business owners

The Millionaire Next Door is all about the study that Thomas Stanley and William Danko conducted a few decades ago that has a simple goal, and that was to know how people became wealthy.
In the first part of the book, the authors listed the seven characteristics of the wealthy, these characteristics will then be discussed in every proceeding chapters of the book.

7 Characteristics of the Wealthy

  1. They live well below their means.

    Despite having a significant amount of wealth, a true millionaire still knows how to be frugal. They are not fond of living a lavish lifestyle, opposite of what most of us believe. According to their survey, millionaires don’t really like to spend that much on material things. Typical millionaires don’t spend more than $399 to buy a suit. Only one in ten millionaires paid more than $1000 for a single suit and only one in 100 paid $2,800 or more.

    Surprised? Well, there’s more...

    Millionaires don’t like to spend much on their footwear too. About half of the surveyed millionaires haven’t spent more than $140 or more for a pair of shoes. Only one in ten had spent over $300.

    See. Millionaires aren’t really what we thought they are. Sometimes those who wear expensive shoes and clothing are nonmillionaires, the ones who are just craving for attention, people who I like to refer as show-offs.

    All in all. I really liked the way the authors showed the frugal side of these millionaires in this chapter. It made me be more aware on my spending, and I’m sure you will be too once you read the book.

  2. They allocate their time, energy, and money efficiently, in ways conductive to building wealth.

    Millionaires know how to value their time, and they also have their own budget plan to follow. They are also much better investors than nonmillionaires.


    It’s because millionaires spend more time planning and managing their investments. According to the survey that they have conducted, millionaires spend about 8.4 hours per month planning their investments, while nonmillionaires only spend approximately half of that or just 4.6 hours per month planning theirs.
    Why do millionaires have more time managing their investments while nonmillionaires do not?
    Maybe because nonmillionaires focus more on other things like buying a new car or house, or they are busy working that they don’t even have the time to plan their investments.

    “There is an inverse relationship between the time spent purchasing luxury items such as cars and clothes and the time spent planning one’s financial future” said by the authors.

  3. They believe that financial independence is more important than displaying high social status.

    If your goal is to become financially secure, you’ll likely attain it.. But if your motive is to make money to spend money on the good life,…you’re never gonna make it.

    The authors of The Millionaire Next Door dedicated one chapter of the book that is all about one of the things most of us spend a fortune on, which is getting our own car.
    It certainly is not the best part of the book because of the way the authors elaborated too much on one simple thing: Millionaires don’t like to own luxury cars.
    They even took it further by constructing a list of different car models and their corresponding price per pound. I don’t really get their point on that because one cannot tell how good a car is or how efficient it is by just knowing its weight, right?

    Fortunately, they still provided statistics that caught my interest, and I like to share them with you in this book review.

    • 81% of the millionaires purchase their car, the rest of them lease
    • Only 23.5% of them own a brand new car
    • More than 50% of them own a car that is 2 years old or older
    • A typical millionaire only spend $24,800 for his most recent acquisition
    • 50% of the millionaires surveyed never spent more than $29,000 for a single car
    • Most American millionaires like to buy American-manufactured vehicles like Fords, Chryslers, Chevrolets and Cadillacs.
  4. Their parents did not provide economic outpatient care.

    The Millionaire Next Door’s authors are against to parents who provide their children or grandchildren too much economic support.


    It’s because their survey revealed that those who receive economic outpatient care or EOC are more likely to depend on their parents than those who receive nothing from their parents. EOC recipients could also be a bad role models to their children because of the way they manage and spend their money.
    The authors noted that those who receive EOC invest less money, and they become more dependent to credit than nonreceivers.
    The main message of that chapter is intended for parents who think giving their children cash gifts or financial assistance can help them have a better financial life. Unfortunately, that is not true.
    Giving your children the freedom to choose their own career and by letting them find their own way to succeed in life can be the next best thing you can do for them. That’s just right after when you let them live in this world.

  5. Their adult children are economically self-sufficient.

    I really liked this chapter because it showed that millionaires can be good parents too despite being too busy managing their businesses or doing their jobs. It also supported the previous statement that giving your child the ability to decide his future can definitely increase the chances of him succeeding in his life.
    Their survey also showed that those who are sons and daughters of millionaires are more likely to become the doctors and lawyers of our society than those with nonmillionaire parents.

  6. They are proficient in targeting market opportunities.

    In this chapter of The Millionaire Next Door, the authors suggest to its readers that one should cater the needs of those with money to spend and not the opposite. They listed different jobs that one could do to increase his chances of accumulating wealth easily.
    Some of these jobs include being an attorney who specialize, a medical specialists, appraisers, accountants, travel agents and contractors.
    Despite being published 14 years ago, the book can still be used as a reference for those looking for a good course to take in college.

    I just wished I had the chance to read The Millionaire Next Door before I got to college. Now, I’m thinking of switching courses, again. Well, I’ve got five more months to decide. I just hope I could make the right decision this time.

  7. They chose the right occupation.

    “Most of the affluent in America are business owners.” noted by the authors.

    They also stated in the book that these self-employed individuals are four times more likely to become millionaires than those who are working for others.

    Statements that I certainly agree to.

    Being your own boss means you have your own set of time, you can do anything you want, and even exceed your own limitations. Even if being a business owner can be a very difficult task, it can all be worth it when you can get your business over the top.

Are you already interested in getting your own copy of The Millionaire Next Door?

Now, as you continue reading the book, you will then be introduced to three new terms that would be used constantly all throughout the book by Thomas and William. Terms that are also very interesting, you may even talk about them with your friend or relatives.

UAW or Under Accumulator of Wealth

UAWs as defined in the book are people with a very low net worth despite having a good amount of salary or sources of income. These people are known to be heavy spenders, and they tend to de-emphasize many of the key factors that underlie wealth building. What do these people considered as “Under Accumulators of Wealth” emphasize?


PAW or Prodigious Accumulator of Wealth

PAWs are a complete opposite of UAWs, they have a high net worth, sometimes 4 times more than what their net worth should be. It’s all because PAWs know how to live below their means and to build up their wealth the right way.
If you’ll be comparing their net worth to others with the same age and income, you could consider theirs as the best of them.
These people are good at managing their money despite having low salaries, and even if they have a high salary, you wouldn’t even notice that they earn that much. PAWs are more likely to be millionaires than UAWs and AAWs.

AAW or Average Accumulator of Wealth

These AAWs have the right amount of net worth that would match how much they are earning. They are the ones who are between UAWs and PAWs.

Are you curious on how the authors can tell what type of accumulator you are?

Well, Thomas and William used a very simple formula to determine whether the people they have surveyed are a UAW, AAW or a PAW.

You just multiply your age to your realized pre-tax annual household income from all sources except inheritance. Divide that by ten. This, less any inherited wealth, is what your net worth should be.

The formula above is a good way to calculate one’s net worth, but it still has its flaws. First, using that formula is only good for those who have enough experience or those who have worked for several years now.

That means people who are young and are fresh graduates couldn’t utilize this formula well. They are better off finding more ways to be successful in their chosen career than worry about their net worth early in their lives.

The good thing is that as you continue to age and add more working years to your life achievements that formula could become more accurate.

What do the authors of The Millionaire Next Door want to tell you?

Thomas and William wanted you to know that most millionaires are self-made millionaires or first-generation millionaires who didn’t inherit any wealth from their parents, but are hard workers, good money managers, and people who know how to take advantage of opportunities given to them.

It’s not really how rich your parents are. It’s how you set your goals, and the things you are willing to do to achieve them. (Click to tweet this phrase)

“They did it slowly, steadily, without having a multi-million dollar contract with the Yankees, without winning the lottery, without becoming the next Mick Jagger” noted by the authors of The Millionaire Next Door.

Who Should Read The Millionaire Next Door?

I would highly recommend that you read The Millionaire Next Door, if you are like the following people:

  • Students looking for some inspiration or financial role models
  • Entrepreneurs
  • Highly paid professionals with bad spending habits
  • People who are about to retire…
  • …and anyone who likes a good dose of financial knowledge.


The Millionaire Next Door is a pretty nice book for those who want to know how millionaires live their daily lives and find out how did these millionaires were able to grow their wealth.

Although, it is not a perfect book, the statistics that they have gathered is what makes this book interesting. Despite having a not-so-good chapter about automobiles, and not being organized enough. The book is still worth purchasing, but for selected people only.

I also think that the authors could have finished the book better. I would also like to ask them if they could repeat their study and make another version of The Millionaire Next Door. The book does has a great concept, and I wish they could do it again making this new generation’s millionaires as their participants.

The Millionaire Next Door Book Rating:

I will give “The Millionaire Next Door” a rating of 4 out of 5.

the millionaire next door book review

The Millionaire Next Door is a great book, that can be utilized by business-minded students, middle-aged professionals and those people who are about to retire.

If you want to get your own copy of The Millionaire Next Door, then buy it now on Amazon!

Next up, The Secrets of the Millionaire Mind! :)

This post was featured at Mo’ Money Mo’ Houses, Retirement Savvy, Disease Called Debt, The Frugal Farmer, Wealth Tortoise, Money Smart Guides, Life and My Finances and Canadian Budget Binder


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  1. says

    I’ve never read this book but I have heard a lot about it.My friend and I were debating providing money (ie pay for education, weddings, etc) for kids this weekend and I was debating against it so I can’t help liking being right 😉

  2. says

    I found the information in the book really interesting, but it is terribly non-fiction, and reads a little boring. Regardless, I hope to become a millionaire next door. If you can be rich when everyone else things you are not, that would be ideal for me.

  3. says

    I have not read this book but have heard a lot about it. It sounds like it hasn’t been updated since it’s 1996 publication? I think it may be a bit outdated now, though I suppose patterns likely haven’t changed much. Definitely some interesting statistics such as not spending more than $29k for a car (though I wonder what that translates to 2014 dollars).

  4. says

    Millionaire Next Door is one of my favourite books, along with the Thomas J Stanley’s follow-up, The Millionaire Mind. The best thing about them is the real life data collected – these are real life millionaires, who have all made their fortunes in different ways, but share common habits and outlooks on becoming rich no matter their circumstances or starting point. If MNR doesn’t inspire you to emulate them I don’t know what will!

  5. says

    This is a very interesting book indeed! I definitely have to get my hands on this. Just a thought that popped up while reading the part about millionaires being frugal and good planners though: if you’ve managed to become a millionaire out of your own hardwork, then you are for sure not a loose thinker. My image of ‘genuine’ millionaires (not those born millionaires) have always been clever, clever people.

  6. says

    Great in-depth review. I just finished reading it, and I was planning to write a review for my blog. Not sure I can do as good of a job as you did though :-)

    Overall, I liked the concepts presented in the book, but the points they were trying to get across seemed to be repeated over and over again to the point of getting a little obnoxious. I think I’d give it a 3/5 overall…

  7. says

    I first read this book in high school, and the underlying concepts are wonderful. I just think the book is a little too wordy, and repetitive. I almost felt like it could be condensed in half and still get out the same message.

    Worth reading though. It was a shocker for me to hear about all these millionaires who didn’t want to drive around in a Rolls-Royce and wanted to live in a smaller sized home to protect their anonymity. Made me think, who among my own neighbors is secretly a multi-millionaire?

  8. says

    I haven’t read this book but I’ve been told some of my writing resembles it. I think it has to do with just working in banking for so many years in both NYC/Jersey and SF areas. Got a chance to witness first hands the different traits and habits.

    It’s on my to do list to read.

  9. says

    Nice article Mark! This is certainly a good read. It just goes to show you that someone that might appear wealthy could have absolutely nothing, while those that appear average could have a net worth far more than you could have ever dreamed!

  10. says

    I know I’m a little late to the party but just wanted to drop a comment. I freaking LOVE this book. I just finally read it recently. I love how it’s more likely the guy driving a used F-150 is richer than the guy driving a new SLK350.

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